Federal Budget 2019 – Opposition Budget reply keeps small businesses guessing
The Labor Party’s Budget reply supports the Government’s surplus and some tax cuts, yet more detail is required before clear benefit seen for the small business sector.
Following the Government’s handing down of the Federal Budget on Tuesday evening, 2 April, Labor leader Bill Shorten today delivered the Australian Labor Party’s official Budget reply.
With a significant focus on healthcare and the National Disability Insurance Scheme, it seems that Labor has followed the Government’s lead in using the discussion around broad fiscal policy as a way of kicking off their campaign for the upcoming Federal Election anticipated to be held in May.
But for small business owners it’s not yet clear how much hope a Labor government would offer.
While Shorten was quick to offer bipartisan support for the budget surplus as well as additional spending to fill the skills gap, there were also a number of measures that may not be seen in a positive light by business owners.
“We welcome Labor’s commitment tonight to a budget surplus, and to paying down net debt,” said MYOB Chief Executive Tim Reed. “Business, particularly small business, does well when the economy does well.”
“What is most pleasing is that both sides have committed to running a surplus.
“This bipartisan support provides certainty and builds confidence for small business owners, which in turn builds their confidence to invest.”
But in mentioning the intent to reverse the Coalition’s move to remove public holiday and retail rates for workers as a ‘first 100 days’ commitment, Shorten may have delivered a Budget reply that leaves business owners concerned.
Personal income tax relief to refocus on lowest paid
Shorten committed to supporting the Government’s plan to increase the Low- and Middle-Income Tax Offset, while also increasing the offset for those who fall below that bracket.
“To give these workers the tax cut they deserve, Labor will increase the offset for low income and part-time workers,” said Shorten.
“With Labor, 10 million Australians will get the same or bigger tax cut.”
Reed sees this announcement as a positive one for small business.
“It is great to hear that those on the lowest income bracket could take home more in their weekly pay with the promise of a tax cut to those who earn less than $40,000 per year.”
“Putting more money back in the pockets of these employees will be better for them and their families, providing better security and stability.
“It will also provide more discretionary spend.”
However, the Labor party doesn’t agree with the Government’s move against bracket creep by creating a flat tax rate for anyone earning between $48,000 and $200,000.
Labor has committed to not go ahead with the Coalition’s July 2022 tax cuts or the July 2024 changes – which would mean that 94 percent of workers pay no more than 30 percent and with the biggest benefits reaped by those at the higher end of the income scale.
In making these decisions, Labor is able to claw back an estimated $150 billion to pay down government debt.
“We won’t back a plan that gives a retail worker on $35,000 less than $5 a week, while an investment banker pockets more than $11,000 a year.
“This is not a tax plan, it’s a ticking debt bomb.”
Tax deduction for investment in equipment
One of the most positive aspects of the Budget reply arrived midway through Shorten’s delivery, where he announced a commitment to offer deductions to small and medium businesses spending big on equipment.
“We backed a tax cut for small and medium businesses and we will provide an extra 20 percent tax break for every business that invests in productivity-boosting equipment above $20,000, whether that’s a big manufacturer buying new technology or a tradie getting a new ute.”
“We will invest in industries where Australia can be the best in the world,” Shorten continued.
“I speak of agriculture and tourism, hydrogen energy, science and research, advanced manufacturing, and mineral exploration to unearth new wealth.”
We’ll have to wait for further updates to come to provide clarity on how this policy will take shape.
Skills for the workforce of tomorrow
While the Coalition has promised to create 80,000 apprenticeships to fill the skills shortage, Labor hopes to almost double that with a $1 billion pledge to plug the skills shortage.
“This investment will provide 150,000 additional apprentice incentives in areas of skill shortages,” said Shorten.
The $1 billion will be invested in TAFE and apprenticeships, with a stated aim of enabling 150,000 Australians access to TAFE with no upfront fees, while an additional 100,000 apprenticeships will be made available.
Shorten’s speech focused on the healthcare sector as it comes to addressing the skills shortage, but we can also hope this initiative might also provide benefit to future-focused industries including the digital economy.
Taken all-in-all, the Budget reply is never likely to be as comprehensive as the Government’s handing down of the Federal Budget, yet Labor has clearly painted a very differentiated view of Australia’s future.
And we expect we’ll only have to wait another month or so to see which vision Australia chooses.
Read more of our Federal Budget 2019 coverage here.